Deep Cuts in Food Stamps Said Averted in Farm-Bill Deal

Free groceries at the Food Bank For New York City on Dec. 11, 2013. Need increased in November when 47 million low-income people nationwide saw their food stamps cut as the federal SNAP program expired. Photographer: John Moore/Getty Images

Jan. 27 (Bloomberg) -- House and Senate negotiators agreed
today on a much-delayed agriculture bill that averts deeper cuts
to U.S. food-stamp spending sought by House Republicans.

The proposed farm legislation, billed as saving $24 billion
through food-stamp cuts and the end of a direct-payment program
for farmers, will get a vote in the House by Jan. 29, a
leadership aide said, before Republicans leave town for strategy
meetings. Senate Agriculture Committee Chairwoman Debbie
Stabenow said the chamber may vote next week.

“This bill proves that by working across party lines we
can reform programs to save taxpayer money while strengthening
efforts to grow our economy,” Stabenow said in a statement
today on the agreement. “It’s time for Congress to finish this
farm bill.”

By approving a plan that largely keeps food stamps intact
and preserves most farm subsidies, an urban-rural coalition has
been maintained amid a tough political environment that saw an
earlier plan rejected in the House. If it passes, the agreement
would be another bipartisan achievement by a Congress faulted
for a lack of legislative success.

The House will vote on the measure this week, said Douglas
Heye, a spokesman for House Majority Leader Eric Cantor.

Bunge, Ace

The bill to reauthorize U.S. Department of Agriculture
programs governs farm subsidies, which encourages planting of
soybeans, cotton and other crops that lower materials costs for
commodity processors including Bunge Ltd. The bill subsidizes
crop-insurers such as Ace Ltd. and funds purchases at Kroger Co.
and other grocers through food stamps, its biggest expense.

While most farm groups are expected to line up behind the
legislation, the bill presents a missed opportunity for sanity
in agricultural policy, said Andy Roth, vice president of
government affairs for Club for Growth in Washington, which
supported treating food stamps and farm policy in separate bill
to costs in both.

“In the end this will be a same-old, same-old farm bill
with a few ticky-tack reforms on it,” said Roth in an interview
before the final deal was announced.

The farm-bill accord would be a third bipartisan deal by
the current Congress, which passed a budget last month and
cleared a $1.1 trillion spending bill on Jan. 16. The five-year
farm legislation would end an aid program that makes direct
payments to farmers and cost about $50 billion over 10 years,
and reduces food stamps. Much of the subsidy spending was
restored in other programs.

Nutrition Aid

The agreement reached on food stamps would cut spending by
$8 billion over 10 years, or about one-fifth of the $40 billion
sought by House Republicans. Negotiators agreed to tighten a
provision that let states give residents as little as $1 a year
in heating assistance to qualify them for an average of $1,080
in additional nutrition aid.

Republicans successfully sought to lift the “heat and
eat” threshold to $20, while Democrats proposed $10. The higher
level creates about $8.5 billion in savings, with about $500
million plowed into other food-stamp-related initiatives,
Stabenow said.

Food stamps used at retailers such as Target Corp. and
Supervalu Inc. cost a record $76.1 billion in fiscal 2013, or
about 12 percent of the $650 billion a year Americans spend on
groceries. About 47.4 million Americans used the program in
October, the most recent month available, the U.S. Department of
Agriculture said Jan. 10.

Wal-Mart, Safeway

Almost half of all food-stamp redemptions are in big-box
supercenters such as Wal-Mart Stores Inc., while most of the
rest are in chains such as Safeway Inc., according to data
collected by Bloomberg.

The farm bill would also forbid food stamps for lottery
winners, an idea supported in both chambers, and restrict aid
for college students. Not included was a Republican plan to
tighten state eligibility requirements, a projected savings of
$11.6 billion, or a $19 billion reduction by reducing waivers
states can give childless adults who would otherwise face work
requirements or time limits under the Supplemental Nutrition
Assistance Program, the technical name for food stamps.

Contested proposals over meat labeling and state laws
governing farming practices are still being negotiated, while a
plan to involve the government in managing dairy supplies will
be modified to gain support from House Speaker John Boehner.

Meat Labels

Companies including Tyson Foods Inc. have called for
country-of-origin labeling, a part of farm bills since 2002, to
be weakened after complaints about the labeling from Mexico and
Canada before the World Trade Organization the U.S. has lost.
Last year the USDA tightened the rules, eliminating the ability
for companies to merely say the beef was from North America and
requiring separate disclosures to say where beef, lamb, pork,
chicken and goat were born, raised and slaughtered.

Opponents had sought to have legislators ease the label
rules as part of the every-five-year rewrite of farm-policy
legislation. Those efforts were unsuccessful, according to a
letter today to farm-bill negotiators by groups including the
National Cattlemen’s Beef Association and National Chicken
Council.

On commodity subsidies, the bill combines a House push to
raise so-called target prices under which the government will
subsidize farmers with the Senate approach that emphasizes more
insurance aid.

Trade Retaliation

As the cost to farm has increased and crop acreage has
shifted from wheat and cotton to soybeans and corn in the past
20 years, price and acreage calculations for aid have been seen
as archaic, though tying subsidies too closely to market
conditions increases the chance of trade retaliation through the
World Trade Organization.

Payment limits under commodity programs would be capped at
$125,000 per individual or $250,000 per couple, with the
definition of a “family farmer” left up to the USDA for
definition purposes.

Crop insurance, which paid out a record $17 billion after
the 2012 drought, would include requirements that farmers follow
conservation plans on their land to qualify for federal
subsidies. So-called conservation compliance is included, while
limits on subsidies for wealthier farmers receiving assistance
on paying premiums, supported by the Senate, isn’t in the bill.

Congressional passage would put in place a new law to
succeed the previous bill passed in 2008. An extension of that
law expired Sept. 30, potentially forcing the USDA to re-implement farm programs governed by language the from 1949 law
that underlies policy and potentially doubling dairy prices.

Agriculture Secretary Tom Vilsack has said the department
is focusing on implementing a new law rather than re-creating an
old one because he’s confident Congress will pass the
legislation. The department won’t change paths unless he’s
convinced otherwise, the secretary said earlier this month.